Geechs Inc. · TSE:7060
Geechs — Q2 FY3/2024 Earnings Presentation
38 slides from Geechs's earnings presentation, Nov 10, 2023
Slide 1: Financial Results Briefing
Financial Results Briefing The 2nd Quarter of the Fiscal Year Ending March 31, 2024 November 10, 2023 GEECHS Inc. TSE Standard Market: 7060 ©2023 GEECHS Inc.
Slide 2: Contents
Financial Results Briefing 1. Financial Highlights 2 2. Results by Segment 9 3. Appendix 20 Contents 1 Financial Results Briefing for the 2nd Quarter of the Fiscal Year Ending March 31, 2024 ©2023 GEECHS Inc.
Slide 3: Financial Highlights
Financial Results Briefing Financial Highlights Financial Highlights for FY3/2024 Q2 1 2 Financial Results Briefing for the 2nd Quarter of the Fiscal Year Ending March 31, 2024 ©2023 GEECHS Inc.
Slide 4: FY3/24 Q2: Financial Highlights
FY3/24 Q2: Financial Highlights Record-high quarterly sales • In Q2, cumulative total reached a record high sales figure, driven by contributions from both Japan and overseas IT freelance matching businesses. • The operating profit for Q2 decreased by 80.1% compared to the same period last year due
Slide 5: FY3/24 Q2: Financial Highlights (Sales, Operating margin)
FY3/24 Q2: Financial Highlights (Sales, Operating margin) ■ Our overseas subsidiary, Launch, significantly contributed to our revenue, resulting in a 44.8% increase compared to the same period last year. ■ Following the trend set in Q1, our quarterly sales reached a new record high. Record-high quar
Slide 6: FY3/24 Q2: Financial Highlights (EBITDA, Operating profit)
FY3/24 Q2: Financial Highlights (EBITDA, Operating profit) ■ In Q2, while IT freelance matching business (Japan) showed strong operating profits, a decline in G2 Studios operating profits below the company's projections resulted in 80.1% decrease in consolidated operating profits compared to the sam
Slide 7: FY3/24 Q2: Financial Highlights by Segment
FY3/24 Q2: Financial Highlights by Segment ■ IT Freelance Matching Business (Japan) : Sales for the first half of the fiscal year reached 6.9 billion yen, setting a record high. Despite continuing investments in advertising, we managed to the segment profit at the same level as the previous year. ■
Slide 8: Revision of Full-year Forecast (Consolidated)
Revision of Full-year Forecast (Consolidated) ■ Although IT Freelance Matching Business (Japan) is expected to follow generally align with our plan, the impact of the overall group's decrease in sales is prompting a revision of our performance. ■ Sales revenues from IT Freelance Matching Business (O
Slide 9: Revision of Full-year Forecasts by Segment
Revision of Full-year Forecasts by Segment ■ IT Freelance Matching Business (Japan) : Due to the review of the annual average number of man-months worked, the revenue forecasts has been revised downward. ■ IT Freelance Matching Business (Overseas) : Due to the delay in the receiving planned MSP proj
Slide 10: Results by Segment
Financial Results Briefing Results by Segment Financial Results for FY3/2024 Q2 2 9 Financial Results Briefing for the 2nd Quarter of the Fiscal Year Ending March 31, 2024 ©2023 GEECHS Inc.
Slide 11: IT Freelance Matching Business (Japan) (Sales, Segment income and Advertising expense ratio)
IT Freelance Matching Business (Japan) (Sales, Segment income and Advertising expense ratio) ■ Despite a slight decrease in sales of 3.4 billion yen compared to Q1, the cumulative total for the half-year reached 6.9 Q2 (YoY) billion yen, setting a record high. ■ Continued branding advertising invest
Slide 12: IT Freelance Matching Business (Japan) (Freelancers under contract, Unit price of orders)
IT Freelance Matching Business (Japan) (Freelancers under contract, Unit price of orders) ■ The number of man-months worked slightly decreased compared to the previous quarter since Q2 of FY3/2021. ■ The mismatch in preferred working styles between engineers and client companies (remote vs. on-site)
Slide 13: IT Freelance Matching Business (Japan) (Profitability)
IT Freelance Matching Business (Japan) (Profitability) ■ Due to the increase in Customer Acquisition Cost (CAC) caused by branding advertising investments, Unit Economics fell to 1.8 from 2.6 in the previous fiscal year. ■ However, Lifetime Value (LTV) has been steadily increasing. In the second hal
Slide 14: IT Freelance Matching Business (Japan) (Effectiveness of branding advertising investments)
IT Freelance Matching Business (Japan) (Effectiveness of branding advertising investments) ■ The number of new client companies increased by 95 in cumulative Q2, indicating a favorable trend. ■ The number of new registrations for IT freelancers reached 748 in cumulative Q2, surpassing the annual tar
Slide 15: IT Freelance Matching Business (Overseas) (Sales, EBITDA and Segment income)
IT Freelance Matching Business (Overseas) (Sales, EBITDA and Segment income) Sales and EBITDA in line with the company plan. ■ In the first half of the fiscal year, the company performed slightly above the pace outlined in the business plan. ■ Due to the amortization of goodwill and the impact of au
Slide 16: G2 Studios
G2 Studios (Sales, Segment income, Number of titles and Number of employees) Q2 (YoY) ■ Due to the slump in the mobile game market, the timing for orders of the planned new development title was delayed, resulting in a segment profit of -62 million yen in Q2. Sales 557 million yen ■ In the second ha
Slide 17: Seed Tech (Sales, Segment income)
Seed Tech (Sales, Segment income) ■ Total sales reached 129 million yen in cumulative figures for Q2, showing a growth of +73.7% compared to the same period last year. ■ Sales from offshore development increased by +96% in cumulative figures for Q2 compared to the previous year. ■ The domestic IT hu
Slide 18: Consolidated Balance Sheet & Cash Flow Statement
Consolidated Balance Sheet & Cash Flow Statement Balance Sheet Cash Flow (million yen) (million yen) FY3/23 FY3/24 Q2 Change FY3/23 Q2 FY3/24 Q2 Change Current asset 6,409 6,385 -23 Operating cash flow -80 -76 4 3,755 3,471 -283 Net income before tax adjustments 263 75 -188 Cash and deposits Account
Slide 19: Shareholder Composition
Shareholder Composition In an environment where U.S. policy interest rates are gradually increasing, there has been some fund reductions from institutional investors managing small-cap and micro-cap stocks. As a result, the ratio of overseas investors decreased by -1.0 points compared to the previou
Slide 20: Approach towards M&A
Approach towards M&A We are focusing on the IT human resources field and IT human resources development/training field. In the first half of the fiscal year ending March 2023, we have been actively considering mergers and acquisitions, with a total of 56 cases, surpassing the pace of the previous fi
Slide 21: Appendix
Financial Results Briefing Appendix 3 20 Financial Results Briefing for the 2nd Quarter of the Fiscal Year Ending March 31, 2024 ©2023 GEECHS Inc.
Slide 22: Solving the Shortage of IT Human Resources in Japan
About GEECHS Solving the Shortage of IT Human Resources in Japan IT Resource Crisis Is Our Business GEECHS supports the work styles of IT freelancers, sharing their skills and experiences with companies that face a shortage of IT human resources. GEECHS also continues to provide globally-oriented bu
Slide 23: Group Corporate Profile
Group Corporate Profile Group companies Company name GEECHS Inc. (TSE Standard Market: 7060) President and IT Freelance Matching Business (Japan) Naruhito Sonehara CEO Established August 23, 2007 IT Freelance Matching Seed Tech Business G2 Studios Business Business (Overseas) Shibuya Scramble Square
Slide 24: GEECHS Social Impact Flow
GEECHS Social Impact Flow Input Group Synergies Through Business Activities Output Outcome Evolution of the IT freelance sharing business Creating a new “normal” Make the biggest impression Financial Capital through the integration of know-how and resources way of working in the 21st century • Growt
Slide 25: IT Freelance Matching Business, Japan
IT Freelance Matching Business, Japan Technology Resource Sharing Platform Growth companies in IT field Internet companies Project information website ■ Ad Tech ■ Med Tech Approx. with constantly over 1,500 projects ■ Fin Tech ■ Real Estate Tech Matching 3,550 ■ HR Tech ■ EC ■ Ed Tech ■ Game client
Slide 26: GEECHS Strengths
GEECHS Strengths Support team structure of 3 people per IT freelancer Quick and relevant matching Support ■ Generous support as a project mentor ■ Speedier matching by taking the whole process online Capabilities ■ Generous support from career advisors ■ Utilizing big data to take factors other than
Slide 27: Source of Growth
Source of Growth Financial Figures Business KPIs Key Success Factor Platform Value Monthly orders Trust from IT freelancers and Sales Monthly unit price of orders Matching Capabilities customers Order period Source of growth Retention rate Support capabilities / Engagement Gross profit Added value f
Slide 28: Connect with IT Freelancers
Connect with IT Freelancers Improve engagement by having effective contact with IT freelancers over the long term Registration Boost exposure Lead acquisition Matching Negotiations Contract Start interview Marketing Automation Lead Generation Lead Nurturing Customer Success ■ Web Marketing ■ One-to-
Slide 29: Differences from Similar Businesses
Differences from Similar Businesses Developing a platform specifically for mid- to high-spec, professional IT freelancers GEECHS Crowdsourcing IT Engineers Dispatch Registrant IT freelancers (main job) Freelancers (side/main job), and others Dispatched workers Main clients Growth companies in IT fie
Slide 30: Engagement
Engagement Strengthening ongoing partnerships to maximize business by increasing engagement with IT freelancers Offering 50 services which enable our IT freelancers to work for extended periods without the Benefits program undue stress of instability for IT freelancers ■ Seminars on how to file a ta
Slide 31: IT Freelance Matching Business, Overseas (Launch Group)
IT Freelance Matching Business, Overseas (Launch Group) Main Clients 1. Australian IT freelance service pioneer Established in 2006, Launch has earned trust and a track record as a venture company in the IT staffing service industry. MSP Contract Launch has been doing business continuously with more
Slide 32: Seed Tech
Seed Tech 1. Providing “Sodatech”, a DX/IT human resource Development business - Offshore development business development service for companies Education business - Sodatech for developing global IT freelancers, IT study abroad Providing a SaaS-type DX/IT human resource development platform for cor
Slide 33: G2 Studios
G2 Studios 1. Specialists in Partner Strategy With solid technical capabilities centered on Unity / PHP, we have stabilized our revenue base through contract development and operations, winning revenue share from successful titles. We have also increased orders for globally distributed titles. 2. Ac
Slide 34: Differences between Developer and Publisher
Differences between Developer and Publisher The future strategy of the Game Business is to become a developer of globally distributed titles. Developer (GEECHS) Publisher Main role Planning, development, and operation of titles Planning, distribution and promotion of titles ● Planning and developmen
Slide 35: G2 Studios: Business and Revenue Image
G2 Studios: Business and Revenue Image Business Model Revenue Image ◼ G2 Studios is a developer specifically contracted by major game companies ◼ Since stable revenue recognition has become possible during the planning and (publishers) for the planning, development and operation of games. developmen
Slide 36: Performance Highlights
Performance Highlights Fiscal Year-End FY3/21 FY3/22 FY3/23 FY3/24 1H FY3/24 Forecast Sales (Thousand yen) 3,427,816 14,340,774 15,997,838 11,917,444 24,400,000 EBITDA (Thousand yen) 815,495 1,226,900 651,393 247,574 300,000 Operating income (Thousand yen) 738,479 1,133,696 589,410 104,965 50,000 Or
Slide 37: Supplemental Data (IT Freelance Matching Business, Japan)
Supplemental Data (IT Freelance Matching Business, Japan) FY3/23 FY3/24 Fiscal Year-End Q1 Q2 Q3 Q4 Full-year Q1 Q2 Sales (Thousand yen) 3,014,968 3,117,730 3,236,528 3,393,625 12,762,853 3,447,652 3,447,026 Advertising expense* (Thousand yen) 43,435 70,656 90,096 119,050 323,238 106,986 108,202 Adv
Slide 38: Notes regarding Forward-Looking Statements
Notes regarding Forward-Looking Statements geechs.com The information contained in this presentation is based on a number of assumptions. These statements are not intended to assure or guarantee the achievement of future numerical targets or measures. Please note that actual results may differ due t